Why Verizon is Betting on The Internet of Things

The “Internet of Things” is the next big transformation as the economy goes digital. It’s about sensors, data analytics, and a kind of ubiquitous connectivity that will utilize all sorts of networking technologies. Measuring and acting on signals generated by everything from steps individuals take to the amount of water flowing over a dam, a vast new industry is emerging to bring more efficiency to society. In a comprehensive new report released Tuesday, Verizon outlines many reasons this Internet of Things (IoT) transition is critical to business. (At Techonomy we are so convinced about this trend’s importance that the theme for our entire company this year is what we’re calling “Man, Machines and the Network.”)

The report, entitled State of the Market: Internet of Things 2016, details how vast will be the transformations of how business and the economy operates in coming years, and puts a range of eye-popping numbers on the phenomenon. It’s not just that the number of connected devices in the U.S. will go from 9.7 billion in 2014 to 25.6 billion by 2020. These changes will transform our cities, our healthcare, our energy systems, agriculture, and how we live in our homes. But what has captured Verizon’s attention is the vast set of implications for business. The size of the market created by IoT activity will rise from about $235 billion in 2016 to $1.3 trillion by 2019, it calculates. This would be a substantial portion of the overall economy, which this year will be around $19 trillion.

Mike Lanman, who oversees Verizon’s enterprise and IoT products and services, is a true believer. After years of industry talk, Lanman sees a fundamental change now accelerating growth: “The market is making a shift from IoT as just an operating cost reducer to IoT driving revenue.” The report outlines a variety of examples–in fields as diverse as growing oysters, marshalling electricity and maintaining vehicle fleets–in which focused investments in IoT are helping grow businesses and companies. Verizon is setting itself up both to support the growth of IoT businesses and establishing new ones itself. It’s clearly no longer a question of whether or not we can connect things and make a better society, but how we will do that to get better outcomes in every sector and industry. Lanman says Verizon CEO Lowell McAdam has been pushing the company in this direction for about a decade. The fruits are only now starting to emerge, it would seem.

It makes sense that a wireless and network company is moving to drive growth of a connected society. Companies like GE, Salesforce, Microsoft, and IBM have for some time trumpeted their commitment to this landscape-altering form of computing. But Verizon’s experience operating the largest wireless network in the U.S. gives it unique assets for an interconnected economy.

Verizon has taken a variety of steps to prepare itself for an IoT world, some of which are highlighted in the report. The company has created a much more efficient wireless network core, explains Lanman. It can handle low-bandwidth emissions from sources like a sensor on a washing machine just as well as the video streaming from a smartphone. The company also acquired and improved a platform it calls ThingSpace, which enables the rapid development and deployment of IoT applications by both itself and by others. The platform taps into numerous capabilities of Verizon’s network and can enable apps to be created quickly for specific tasks. For example, a New England oyster farm created an app that uses temperature sensors and cameras to monitor the conditions and growth rates of oysters, based on variables like water temperature and chlorophyll values. “We want the market to move faster,” says Lanman. “ThingSpace makes it easy for developers large and small to get into the IoT space.”

Verizon has even worked with companies that develop inexpensive chipsets that can go into all manner of connected appliances and industrial equipment, to both help get the price down and to tune them for wireless performance on the network.

The report compares ThingSpace to platforms like Apple’s HomeKit, Cisco’s Jasper, Google’s Brillo, and IBM’s Watson. But in some ways the company’s overall strategic approach might be best compared to Amazon, which built a unique set of server-based business assets as it grew its retail business, then emerged unexpectedly to become the central global “cloud” provider with Amazon Web Services. Now Verizon is similarly taking its own long experience running networks and building products for its business customers, and making that infrastructure available more freely to partners. Says Lanman, in response to my asking him if that was a good way to look at it: “Amazon saw a need in the marketplace and came in early to navigate through it and support a market developing around it. We’re definitely doing that for IoT.”

While IoT connectivity and measurement has already begun making inroads in numerous industries, Verizon underscores how quickly that is growing. The number of network connections in U.S. transportation and distribution, for example, grew 49% in 2015. Home monitoring grew 50%. And in the energy and utility industry, network connections grew 58%. This will only accelerate.

Verizon’s commitment to IoT is even helping it participate in the sharing economy. “The millenial generation doesn’t want to acquire a lot of devices,” says Lanman. “We see a lot of societal benefit to providing access to things ranging from vacation rentals to bikes.” In such applications, the actual devices or properties being borrowed, rented or shared might be equipped with those chipsets Verizon helped develop. The company created its own Auto Share platform for sharing cars. It’s already in use on some college campuses and is available to partners. The technologies behind it can be tapped using application programming interfaces (APIs) so others can build sharing services for anything.

Another area where Verizon is putting extensive resources is agriculture. Farmers are increasingly moving to what’s called “precision agriculture,” measuring the exact conditions in a given plot of soil and calibrating inputs of water, fertilizer, and other elements for optimum growing conditions. Hahn Family Wines in Monterey County, California has equipped some vines with sensors in a pilot project with Verizon. Among the elements: water flowmeters, moisture probes at four different levels of the soil, and a weather station to measure temperature and other conditions. Verizon’s “Ag Tech Solution” on ThingSpace provides the gateway to continuously monitor and optimize all these elements of the growing process.

Some services Verizon will build itself–like its Hum service for car owners. It lets them monitor their speed, location, and driving history, sets in motion roadside assistance if you break down, and even connects drivers when necessary to a mechanic. Many other services Lanman envisions will get built by others, using the same building blocks Verizon is now making available through ThingSpace. “Having that end-to-end applications creation environment and layering on top these enterprise services, including data analytics that use our own assets, is unique,” he says. “There is just not anybody else who has this.”

It’s hard to talk to a major tech company without hearing about its commitment to the Internet of Things. In Verizon’s case, there’s a lot to say. If you want to hear it for yourself, download the report here.

Verizon is a Techonomy partner, and will participate in the May 26 Techonomy NYC conference at NYU.